The Directors of Smiths City Group Limited, the Christchurch based retailer, have announced an operating surplus after taxation for the 12 months to 30 April 2015 of $8.0 million (last year $4.1 million).Operating revenues for the 12 months were $221.4 million (last year $220.0million).The Directors have declared an unimputed final dividend of 2.5 cents (last year 2.5 cents) to be paid on Friday 14 August 2015. The dividend will be paid to those shareholders on the Share Register at 5.00pm Friday 7 August 2015. This brings the dividend to 3.5 cents for the full year (last year 3.5 cents).The summary of consolidated results is as follows:*Other income includes insurance proceeds of $8.523million received for the Colombo Street property. The costs associated with the Stage 2 rebuild have been added to the value of the property. This treatment is consistent with that applied last year.**The deferred tax charge for the current period takes into account temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes together with the movement in the company’s estimates of future taxable profits on the basis these can be offset against the tax losses available. Smiths City has available carry forward tax losses of $7million, carried forward to future years hence no income tax is payable.The final insurance settlement was used to reduce debt. As a result, the net asset backing increased from 78cents to 90cents per share. Secondly, the level of borrowings has reduced from $22.6million to $16.1million.Net cash flow from operations (excluding the insurance settlement) has increased from $3.1million to $4.0million.Commenting on the result Chairman Craig Boyce, said“While the retail environment remains challenging, we are pleased that Smiths City has broadly held revenues when compared to last year. Sales on a same stores basis increased 2.5% on last year when the closure during the year of four “appliance only “ stores is taken into account. This gives us the confidence to expand our offer through the addition of a new store in Taupo that will open in October 2015. This is consistent with our stated desire to broaden our offering through the North Island to rebalance our revenues across New Zealand. We will continue to seek & identify market opportunities during the year ahead.The South Island market post Christmas was weaker than last year due to lower confidence in the rural and provincial areas arising from the east coast drought and lower farm product prices. This is likely to impact our South Island sales line during the year ahead.We maintained market share in our core categories and continued to improve returns through emphasising the home furnishing and whiteware categories of our retail business.Sales and margin pressure continue with fierce competition in the computer and consumer electronics segment with subsequent margin erosion as a result. Price deflation continued in the computer and communication products but has stabilised in consumer electronics with likely price increases in the period ahead due to the weakening NZ$.When reviewing the balance sheet it will be seen that the Colombo Street Christchurch property has been revalued based on an independent valuation from Colliers International. This has further strengthened the balance sheet with the revaluation being in addition to the costs of completing the repair and rebuild work on the property. Completion of this project has brought the store’s retail footprint back to its pre-earthquake size but with an enhanced quality.The Directors believe now is an opportune time to consider strategic options for the Colombo Street property and, accordingly, have appointed colliers International to advise the Board on alternatives and options for this particular site.Looking ahead the Directors have tasked the Roy Campbell the new Chief Executive Officer with the immediate objective of improving returns from our retail operations. To this end the company is continuing the review of its supply chain as part of a wider strategic review of all areas of the business. The review has particular relevance to the multi brand and service offering currently part of Smith City.In December the company welcomed Sheena Henderson to the Board as a replacement for Sarah Ottrey. Having served in several senior executive positions with a particular focus on marketing, Sheena has brought unique marketing skills to the business and an opportunity to promote the Smiths City brand.Rick Hellings resigned as a Director at the end of May. The Board of Directors wishes to acknowledge the significant contribution Rick has made to the business during his 15 years as CEO and, in particular, in overcoming all the difficulties associated with the 2011 Christchurch earthquakes.Finally I would like to take this opportunity to again thank our staff, customers and shareholders for their ongoing loyalty and support.Craig Boyce Chairman
